Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Somebody Wants DNO's Iraq Assets

The plot surrounding the mystery international bidder for Norwegian oil company DNO's $700 million assets in Iraq thickened on Tuesday, when the Oslo Stock Exchange cleared DNO of any wrongdoing, after it was accused of inventing the story to boost its shares.

Following a week-long investigation, the Oslo Bors confirmed Tuesday morning that it had seen evidence of the $700 million bid. DNO had said on August 22 that the offer had come from "a large international oil company" which was interested in its license shares in Iraqi Kurdistan, an autonomous region in northern Iraq. Although DNO said it would not pursue the approach any further, its share price rose more than 11% after the announcement.

Regulators from the Oslo Bors launched their investigation a few days after unnamed DNO bondholders sent a letter to Norway's bond market watchdog, Norsk Tillitsmann. The letter called into question the legitimacy of the oil company's claims of a bid.

"We are still looking into the matter of the bond owners," said Oslo Bors spokesperson Guro Steine. "We want to find out why these trustees are saying that this is not true."

Although analysts could only speculate about the motivation behind the bondholders' counterclaims, there is the possibility that it might simply be a way to cut through the market noise to find out what is really going on.

"They want security as bondholders," said Rolf Haakensen, an Oslo-based analyst with Kaupthing. "If they feel that DNO is just leaking such information to keep the share price at a decent level, then they could be hiding what is going on with the underlying business."

Yet the all-clear from Oslo Bors suggests there really was a large oil company eyeing DNO's Iraq assets. Who might it have been? Total, Chevron, Royal Dutch Shell and Dow Chemical have all been reportedly involved in Iraqi oil agreements, largely in preparation for when the country's oil industry is liberalized. (See "Shell And Dow Prepare $2.1 Billion Iraqi Petro Plan")

Shares in DNO stayed relatively flat on Tuesday afternoon, slipping 0.08 Norwegian kronor (1 cent), or 0.7%, to 10.71 kronor ($1.84) in Oslo.

http://www.iraqupdates.com/p_articles.php/article/21441

Former Iraq oil minister hopeful for Basra

A former Iraqi oil minister says political parties will resolve the sometimes violent power struggle in Basra as British troops pull back to the airport.
"There's a struggle for power everywhere," Ibrahim Bahrul-Uloom said on the sidelines of an Iraqi oil conference.

"Basra's very important, the richest city in the world as far as the reserves are concerned because Basra, only as a province, has 68 billion barrels of oil," he said. "But I think whatever we have seen right now from tension between the political side can be solved within the next few months."

Bahrul-Uloom, oil minister from September 2003 to June 2004 and May 2005 to December 2005, spoke at the Iraq Oil, Gas, Petrochemical and Electricity Summit, organized by the London-based Iraq Development Program.

Basra is the oil capital of Iraq, where most of the country's 115 billion barrels of proven reserves are located and nearly all its 1.7 million barrels per day of exports are sent to market.

It has seen upheaval as regional and national political and militia groups angle for control of the province and the lucrative black market for fuels and oil.

British troops have been the only Multi-National Force presence in Basra, and the country withdrew its remaining 500 troops from the city to the base at the airport.

Political parties in Basra, which also have power in the federal government, dispute control but have left fighting to their militias and rival gangs to be carried on in the streets. There is a fear that a surge in violence could spread far enough to negatively affect the oil sector.

Bahrul-Uloom said calming Basra depends on how politics in both Baghdad and Basra pan out, but he's hopeful.

"Now we'll see signs that things have slightly moved," he said, adding it won't be fixed "within a day or night" but rather will trickle down "from the center."

"A very difficult situation but part of the political change, environment and there are some mistakes that have been done in Iraq. Some of them coming from the previous regime. Some of them committed by us. Some of them committed by Americans. It's a cumulative process."

He said the biggest mistake was appointing key government positions based on party affiliation and not expertise.

http://www.iraqupdates.com/p_articles.php/article/21442

Dollar demand exceeds 100m ceiling, exchange rate down in daily auction

Demand for the dollar was higher in the Iraqi Central Bank’s auction on Tuesday, reaching $108.075 million compared with $52.380 million on Monday.

In its daily statement the bank said it had covered all bids, including $15.235 million in cash and $92.840 in foreign transfers, at an exchange rate of 1,237 dinars per dollar, a tick lower than yesterday.

The 17 banks that participated in Tuesday's session offered to sell $18 million, which the bank bought at an exchange rate of 1,235 dinars per dollar.

In statements to the independent news agency Voices of Iraq (VOI), Ali al-Yasseri, a trader, said the lower exchange rate encouraged traders to make higher bids in foreign transfers bringing up the overall demand for the dollar in today's auction.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

http://www.iraqupdates.com/p_articles.php/article/21428

Iraq formally takes charge of Basra palace

Iraq on Wednesday formally took charge of the last British military base in the southern port city of Basra.

"Today we celebrate the takeover of the Basra Palace from the mulitnational forces," said Iraq's national security advisor Muwaffaq al-Rubaie who was in Basra to oversee the formal handover.

"It is a happy day as it represents restoring of national sovereignty."
On Monday, around 500 British soldiers slipped out of the former Saddam Hussein palace, handing over security to Iraqi forces and leaving behind a city in the grip of a brutal militia turf war.

The British military has now handed over four of the five bases in the Basra province to Iraqi forces, after four and a half inconclusive years of fighting since the US-led March 2003 invasion.

Britain's entire military force of 5,500 troops is now based at Basra's desert air base, 11 kilometres (seven miles) west of Basra city.
The move came amid heightened tensions between Washington and London, the closest US ally in Iraq, over their policy in the war-torn nation.

The evacuation of the troops from Basra city paves the way for a full British handover of security in the region to Iraqi authorities which the defence ministry says could take place in the autumn.

Iraq formally takes charge of Basra palace | Iraq Updates

Iraq PM discusses filling government posts with top cleric

Prime Minister Nuri al-Maliki met on Wednesday with the reclusive leader of Iraq's Shi'ite majority, Grand Ayatollah Ali al-Sistani, to discuss a government crisis in which nearly half his cabinet has quit.

Sistani is the sponsor of the prime minister's ruling United Alliance and rarely leaves his home in the holy Shi'ite city of Najaf in southern Iraq.
Speaking after the meeting, Maliki told reporters he had come to Najaf to seek Sistani's advice on filling empty ministerial posts and to get his thoughts on the possibility of reforming the government.

"I discussed with him the case of the government. I asked his help in forming a government and nominating new ministers, or if there is the possibility to form a new government based on technocrats," he said.
Maliki did not say how Sistani responded, and the cleric's office declined to comment.

One of the biggest blocs in the United Alliance, the movement of fiery Shi'ite cleric Moqtada al-Sadr, pulled out of the government in April in protest at Maliki's refusal to set a timetable for a U.S. troop timetable.
The biggest Sunni Arab bloc in parliament, the Accordance Front, has also pulled out its ministers, accusing Maliki of sectarianism.

The walkouts have dealt a blow to efforts to bridge the deep divide between Iraq's Shi'ite and Sunni Arab communities and reach agreement on laws seen by Washington as vital to fostering national reconciliation.

Amid calls by some Democrats in Washington for his ouster, Maliki is under growing pressure to show political progress to match the military gains that have been made in certain areas.

Maliki also said he was considering a proposal to declare Iraq's holy cities, which are home to some of the most important shrines in Shi'ite Islam, weapons-free zones, with only the military entitled to be armed.

"I am considering that holy shrines and sacred cities be peaceful places and disarmed of weapons and under the protection of the Iraqi army," Maliki said, without elaborating.

The proposal follows fierce fighting near the Imam Hussein and Imam Abbas shrines in Kerbala last week in which dozens of people were killed. The fighting disrupted a major religious festival and forced hundreds of thousands of pilgrims to flee.

The gun battles appeared to involve Sadr's Mehdi Army militia and the Supreme Iraqi Islamic Council, a rival Shi'ite faction whose armed wing controls police in much of the south.

Iraq PM discusses filling government posts with top cleric | Iraq Updates

Bush visit shows 'no alternative to Maliki'
Baghdad: US leader’s visit to Iraq shows US support of Iraqi government for its efforts to stabilize country.

US President George W. Bush's surprise visit to Iraq was a stamp of approval for the embattled government of Prime Minister Nuri al-Maliki, government spokesman Ali al-Dabbagh said Tuesday.

"The message is that there is no alternative to this government," Dabbagh said in a television interview. "Thinking of alternatives to this government is a figment of the imagination."

Bush's meeting with Maliki at a desert air base on Monday during a brief stopover on his way to Australia also showed "US support of the government for its effort to stabilise Iraq," Dabbagh said.

"We should not stop the political process just because there are differing views within the government."

During their meeting, Maliki and Bush discussed the security situation in the country and the apparent security gains by US-led forces in the restive province of Anbar.

"This could help in dealing a final blow against Al-Qaeda," Dabbagh said.
Iraq's lawmakers too saw Bush's visit as a boost for Maliki.

"The visit reflects the intention of the US administration to support and enhance Iraq's political process," said deputy speaker Khalid al-Attiya.
Salim Abdullah al-Juburi, an MP from the National Concord Front, the main Sunni bloc in parliament, said he believed Bush had come to show his support for Maliki.

"It was a way of supporting the government. It was meant to urge the politicians to bypass the crisis through a formula that gathers all parties," he said.

The view was echoed by Abdul-Bari Zebai, an MP representing the Kurdish alliance.

"Bush exercised no pressure on the government. His visit was within the framework of encouraging the government and pushing the political process forward," said Zebai.

Bush visit shows 'no alternative to Maliki' | Iraq Updates

Australia 'still committed to Iraq'

Australia remains committed to maintaining its military presence in Iraq, the country's prime minister has said.

Speaking after talks in Sydney with the visiting US president, John Howard said decisions on keeping Australian troops in Iraq would not be "based on any calendar but on conditions on the ground".

"Our commitment to Iraq remains," said Howard, speaking alongside George Bush.

"Until we are satisfied that a further contribution to ensuring that the Iraqis can look after themselves cannot usefully be made by the Australian forces, they will not be reduced or withdrawn."

Bush arrived in Sydney late on Tuesday ahead of summit of the 21 nation Asia-Pacific Economic Co-operation (Apec) forum this week.
With Bush as well as the presidents of Russia, China and other regional leaders in attendance, Australia has deployed its largest ever security operation for the summit.

Some 5,000 police and special forces are being deployed in and around Sydney in anticipation of demonstrations from anti-war groups and other protesters.

'Close ally'

Howard's comments came as the top US military commander in Iraq hinted that he may recommend a reduction of US troops by March 2008.
The comments from General David Petraeus echoed similar remarks made by Bush on Monday during a visit to Iraq on his way to Australia.

Speaking to reporters on Wednesday, Howard reaffirmed his close support for US policy.

"We believe that at a time like this, a close ally and friend such as Australia should be providing the maximum presence and indication of support to our very close ally and friend in the president of the United States," he said.

For his part, Bush said he saw security and political progress in Iraq and vowed to "hang in there" de****e pressure to pull US forces out.

"If I didn't think we could succeed, I wouldn't have our troops there," he said. "There's more work to be done. But reconciliation is taking place."
Australia has about 1,500 troops on operations in support of the war, about 550 of whom are employed in combat roles.

But the Australian government's support for the war has hit Howard hard in opinion polls ahead of national elections due this year.

Latest polls show Kevin Rudd, Australia's opposition leader, ahead of Howard by as much as 18 points.

Bush is expected to hold separate talks with Rudd later in the week

Climate deal

As host of the annual Apec meeting, Howard has put a declaration on climate change and curbing global warming high on the summit agenda.

Bush, who has been criticised for his opposition to the Kyoto Protocol regulating greenhouse gas emissions, was expected to push for a new climate change deal more to his liking.

Speaking after his talks with Howard on Wednesday, he urged Apec nations to band together on the issue, saying that China and all other major polluters must be part of any effective solution.

"For there to be an effective climate change policy, China needs to be at the table," Bush said after Wednesday's talks with Howard.

"In order to get China to the table they have to be a part of defining the goals."

Australia 'still committed to Iraq' | Iraq Updates

Iraqi parliament faces US deadline

Iraq's parliament has reconvened after a month-long summer break under pressure from Washington to take up key benchmark legislation.

The session opened on Tuesday with 158 members of 275 present - enough to form quorum, but the agenda was not immediately announced.

Washington has, however, put pressure on Iraqi politicans to work through the summer to tackle pressing issues.
MPs face two major issues: whether former Baath party members will be allowed back to positions of power and whether to pass an oil law aimed at dividing up resources.

Leaked report

General David Petraeus, the American commander in Iraq, and Ryan Crocker, the US ambassador, are due in Washington to report to the US congress next week on progress in Iraq since the introduction of 30,000 more American troops, including whether advances are being made towards national reconciliation.

But a leaked draft report by the US government accountability office has already deemed the Iraq strategy of George Bush, the president, to be failing.

Contrary to claims made by Bush about improving security situation during a surprise visit to Iraq on Monday, the report stresses the level of violence against Iraqi people has remained unchanged.

Stating that the Iraqi government has been successful in meeting only three of 18 benchmarks set by the US, the report added that Iraqi forces remain unprepared to take over security and that Shia militias have infiltrated security forces.

The leak was orchestrated by an official who, according to the Washington Post newspaper, feared the official report will be watered down and given a more positive spin under pressure from the Pentagon and the White House.

Key talks

While parliament was in recess, Nuri al-Maliki, the Iraqi prime minister,
attempted to break the impasse with major Shia, Sunni Arab and Kurdish leaders in a high-level meeting just over a week ago.

Brown: Basra not a defeat

It brought al-Maliki on the same table with Adil Abdul-Mahdi, the Shia vice-president, Tariq al-Hashemi, the Sunni Arab vice-president, and Jalal Talabani, the president, who is a Kurd.

They said they agreed in principle on some issues that the US has set as benchmarks for progress, among them holding provincial elections, releasing prisoners held without charge and changing the law preventing many former members of Saddam Hussein's Baath Party from holding government jobs and elected office.

Iraqi officials have announced similar deals in the past, only to have them fall apart.

Iraq First plan

On Tuesday, Mouwaffak al-Rubaie, Iraq's national security adviser, announced a three-year plan to bring stability to the country and achieve national reconciliation.

He said: "This is an Iraq national security strategy for the years between 2007 and 2010. This strategy will provide, for the first time, the Iraqi government a ... coherent top-level direction towards the government in its efforts to establish security, promote prosperity and self-reliance."

He said the strategy, called Iraq First, will be linked to the Iraq compact that was launched in May in Egypt and outlines international aid for Iraq, including debt relief.

It also sets tough commitments for the government, particularly measures aimed at granting Iraq's Sunni Arab minority a greater role in the political process.

Al-Rubaie said the strategy was put together by 23 experts during three months of hard work. He said: "It also affirms principles of federalism, the rule of law, human and self rights."

Iraqi parliament faces US deadline | Iraq Updates

Iraq needs nearly $80B in energy funds

Iraq's top economic adviser says Iraq's oil and electricity sector needs $79 billion in investment through 2011.

Kamal Field al-Basri, senior economic adviser to Maliki and executive director of the Iraq Institute for Economic Reform, said on the sidelines of an Iraq energy summit the oil sector alone needs $56 billion, from pumping the oil to refining needed fuels, "to satisfy Iraq needs for this period."

Iraq's energy sector is cut and bleeding yet is still able to produce about 2 million barrels per day. It exports about three-quarters of it, bringing in enough money to fund 93 percent of the federal budget last year.

The oil sector was misused by Saddam Hussein and held back by U.N. sanctions, and made worse by more than four years of war. Its infrastructure, like electricity, is regularly targeted by insurgents.

Iraq has the third-largest oil reserves in the world, as well as massive natural gas fields, but currently has no infrastructure to make use of the gas. It could be sent to market if not used in a more economic and environmentally friendly way to power electricity generators.

There is a lack of refineries as well, part of the reason for the massive fuel shortage in the country.

None of that can function without the electricity, which is irregular and leaves Iraqis with many hours, if not most, of the day without power.

"To increase electricity to the optimal level, which is 21,000 megawatts, we need about $23 billion," Basri said. Iraq currently has an installed generation capacity of more than 11,000 megawatts.

"Iraq cannot generate the required investment internally, but we are looking for international support for that," Basri said. "We can satisfy about 42 percent of that need internally, but the rest we need from the international side, through grants, loans, international private sector investment.

Iraq needs nearly $80B in energy funds : World

Iraq fuel cost, public services entwined

Iraq needs to stop subsidizing its fuels but step up quality of life services to citizens, a top government adviser said.

Kamal Field al-Basri, senior economic adviser to Maliki and executive director of the Iraq Institute for Economic Reform, told UPI on the sidelines of an Iraq energy summit that fuel subsidies are too subjective to benefit the entire country.

Fuels subsidies are "not distributed equally, they benefit only those who have a car, not the poor," Basri said at the Iraq Oil, Gas, Petrochemical and Electricity Summit organized by the London-Based Iraq Development Program.

He said the funds dedicated to subsidizing fuels could be best used in other sectors "that can improve the standard of living Â… ho****als and things like that."

"In 2005 the total value of the subsidies that the government gives to fuels amounted to $809 billion, which is a huge amount," he said, adding it would be a strike against the growing fuels black market. "That explains why we have smuggling of fuel to neighboring countries. The government is committed to reform on these issues."

Iraq has long subsidized transportation, heating and cooking fuels, but two years ago began phasing them out as part of an agreement with international creditors, the International Monetary Fund and World Bank.

He said the goal is to price Iraqi fuels the same as those bought in other countries in the area.

When asked about reports that the finance minister wants to curb the pace of subsidy removal next year, Basri said, "Unfortunately, when we implemented the reform, the situation deteriorated with respect of public services.

"We cannot do this reform in isolation of the other services. So fuel becomes expensive and any other expenses become hard for government. So it affects the standard of living dramatically so the rate of the poverty increased because of this," he said. "So we need to do two things: reform and parallel to this, increasing the public services to the populations."

Iraqis suffer from 54 percent poverty and 20 percent unemployment, Basri said. Other Iraqi and U.S. figures put Iraq's unemployment at two to three times higher.

They also largely lack basic services like regular electricity and clean water, mixed with a deteriorating healthcare and educational system, and the violence that has engulfed the country since the war began.

Iraq fuel cost, public services entwined : World